Neobank CEO Sees DeFi as Solution to Africa’s Forex Challenges

Nov. 30, 2023
Neobank CEO Sees DeFi as Solution to Africa’s Forex Challenges

A vacuum is created, and decentralized finance (DeFi) could fill it. Pascal Ntsama IV, Canza Finance CEO, sees potential in cryptocurrencies and blockchain networks. Furthermore, it is difficult for most to access United States dollar liquidity and currency swaps in the forex market.

A limiting factor for African sovereigns restricts their import-dependent economies and services in dollars. The impact, as such, affects the continent’s economic dynamics.

The CEO of Baki and co-founder of neobank, Canza Finance, says the use of Baki for foreign exchange transactions in Africa will create a regional hub. The hub enables commercial entities in the continent to trade intra-African and on foreign exchanges at almost Low cost.

The CEO and co-founder of Canza Finance, the neobank helping Africans to make decentralized cross-border payments, highlighted an innovative DeFi technology of Canza-Baki. It can help prevent the abovementioned challenge with the source by providing decentralized foreign exchange (FX) for African currencies.

Moreover, Baki facilitates slippage-free swaps at central bank rates, offering solutions to the complications that were the order of the day in cross-border transactions in the region. It also seeks to create a hub for businesses to participate in intra-African and FX trades at a reduced cost.

Local African fiat exchanges spur inflation in the dollar, escalating costs due to currency slippages as funds exit the continent. Baki solves this by allowing traders to swap without loss, trading at official central bank prices.

African DeFi will register a compound annual growth rate of 21.99%, topping at over half a million users in 2027. However, industry stakeholders call for review as the penetration of blockchain products continues to register new heights at the grassroots level.

Baki’s Financial Innovation: Navigating Challenges in Non-Blockchain Adopted Regions

Baki addresses concerns by complying with Nigerian regulations. Ntsama assures its applicability, emphasizing adherence to current standards. However, despite low technology penetration within Nigeria, Baki has been built to have practical adoption by riding on existing user experiences within the country.

Moreover, Ntsama noted the platform has the flexibility to deal with challenges associated with blockchain technology. Baki embarked on a strategy in line with the authorized framework provided within Nigeria. He maintained that a positive shift in regulation would bring more industrial and institutional adoption for Baki.

Ntsama highlights the Agent’s local currency risk in FX swap, demanding the buyer’s extra pricing for risk evolution until recyclable. By exchanging comparable currencies at official rates and reducing slippage, Baki reduces risk. This makes it easier to move between positions in US dollars smoothly.

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Baki liquidity providers earn yield from an 80 basis points charge on each currency swap in the system, according to Ntsama. The yield splits 50% towards the liquidity providers, 25% to Canza Finance native tokenholders, and 25% to Canza Finance itself.

Rida Fatima

News writer
An ardent wordsmith with a rich five-year background in delving into the realms of finance and cryptocurrencies. Alongside curating captivating blogs, Unique's talents extend to crafting imaginative and engaging content.